Auditing in the Public Sector Term Paper
- Length: 8 pages
- Sources: 9
- Subject: Accounting
- Type: Term Paper
- Paper: #15535580
Excerpt from Term Paper :
Auditing function has undergone several transformations from the periods when it was simply a function of giving opinion but also to an error where auditors are looked upon to offer advisory roles. The auditors should therefore advice the government on the impacts of their operations on the public and on other improvements that can be made to maximize on the service delivery. In pursuing their taxation policies and fiscal policies, the auditors need to offer appropriate advice to the executive to ensure that the policies improve economic performance and improve the welfare of the society. Government expenses should improve the economic performance and ensure stability in the financial markets. If auditors provide technical advice to the governments, stability and better management will be realized hence improving the welfare of the citizens.
The management of public resources has been flooded by corruption and theft. This calls for need to conduct forensic audit with the aim of determining the illegal and abusive use of public resources Marr 96.
In forensic auditing, auditors use auditing procedures and knowledge to detect the deliberate actions by officers to siphon public resources for their personal interests. In cases where huge public resources have been diverted in illegal ways, the auditors will have the obligation to institute such procedures to reduce losses and inefficiencies in the management of public finances. In the event that such procedures fail to detect the illegal acts, the public will risk losing vast amount of resources and threatening economic growth. Corruption and other illegal crimes can also result into destabilization of the financial markets.
Auditors also have the important mandate of deterrence. The presence of auditors will make the help in reducing the chances of corruption and promote good public finance management. Auditors' actions deter the occurrences of risk by evaluating the controls of existing functions and those proposed for new functions Kumar and Sharma 314.
Similarly, auditors have the role of assessing the organizational risk that is able to increase the risk factors. In addition, auditors are helpful in deterring fraud occurrence by reviewing the likely changes in legislation, rules, and procedures. Finally, the role of deterring fraud and abuses is through reviewing contracts to determine conflicts of interests. Deterrence could also be made possible from the previous successful detection of fraud and losses. If there is, a history of successful uncovering of fraudulent and negligent losses, government officials would their best to deter the occurrences of new losses and fraud. This would require that auditors involved in an engagement are highly qualified and experienced in order to ensure successful conduct of audit processes.
The insight role of auditors is important in the public sector auditing. By evaluating government, programs tend policies and determining which ones are best, auditors assist in ensuring best practices. They will promote vertical and horizontal benchmarking within the government departments and sectors to ensure that there is improvement in the performance of the departmental performance. The audit process helps in institutionalizing learning by offering feedback and altering policies. Through audits, descriptions of problems, resources accompanied with useful recommendations helps stakeholders in rethinking and restructuring their operations for desired improvement of service delivery Nicoll 45()
Foresight role is also a very important function that is performed by public sector auditing. In forecasting auditors aim at establishing trends from the previous activities in order to take, necessary actions that will help the public sector sail future opportunities and threats. The current society experiences profound changes in the environment that dictates the need to adopt new strategies that will ensure government manages diversity. Some of the areas that experiences significant changes include science and technology, demographics, social and economic changes and political changes. For the purpose of decision making and planning auditors will owe the government the duty of providing necessary advice pertaining the future happenings. Forecasting function of auditing assists the state in making plan hence avoid getting into complications that could jeopardize future operations. Forecasting role further ensures that the government officials assess the risk elements and take the necessary precautions in risk management. The forecasting role of the government is crucial determining the long-term management of the business.
Public sector functions of detecting, deterrence, forecasting and providing an insight into the operations and management of public enterprises is thus important in promoting government values of transparency, equity, accountability, and openness in the management of public resources. Auditors who are charged with the duty of conducting an audit must therefore remain independent and do their roles with the required threshold and objectivity that would ensure successful achievement of their work.
To make sure that the audit functions re well realized, the government must ensure that the auditors have the legal mandate to execute the tasks. The laws should also specifically give auditors their powers and define the limitation of their powers and roles. The auditors in executing their engagement must uphold the general principle of objectivity, independence, accountability, and professionalism. Auditors must take responsibility for their actions and conduct and they should be held liable for negligence and fraud that impairs their reports and work. They must preclude themselves from personal interests and biasness arising from political or personal interests.
In conclusion, public sector auditing should be conducted to ensure better utilization of public resources and to make the government accountable to the citizens. Through the audits, good governance would be enhanced and the public confidence boosted. The executive and elected officials should therefore ensure independent audit offices to improve the management of public resources.
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